ST. GEORGE — A hotly disputed gypsum mine near the retirement community of SunRiver St. George has not produced any minerals since it received its conditional use permit in 2012, and now a Washington City man, whose investment company’s assets include the mine, is being sued by the SEC for fraud and breach of fiduciary duty to investors, claims the defendant denies.
The Securities and Exchange Commission filed a complaint in February against Jacob Cooper and his investment company Total Wealth Management Inc. The court later appointed a receiver over Cooper and his company’s assets.
According to a report filed March 12 in U.S. District Court for the Southern District of California in Los Angeles, receiver Kristen Janulewicz, an accountant in Irvine, California, identified Cooper’s investment company, Total Wealth Management Inc., as receiving revenue sharing, management and other fees from investment funds that had been losing money or had what Janulewicz characterized as “unusual affiliations” with Cooper.
Cooper’s companies hold investments listed in excess of $30 million in Private Placement Capital Notes II LLC, which, according to the receiver’s report, has limited resources and holdings.
The report stated that Private Placement Capital holds two major investments for Total Wealth Management:
- A golf resort in South Carolina whose condition is described as distressed
- Good Earth Minerals LLC – which sought approval from the Washington County Commission in 2012 for a gypsum mine in Southern Utah
Good Earth Minerals is described in the report as having $3 million invested in its operation. The report goes on to say that Good Earth Minerals has only begun building its infrastructure and, to Janulewicz’ knowledge, no mining has actually taken place there.
However, Good Earth Minerals’ lease with the Bureau of Land Management and its operating permit from Washington County remain intact.
Another $3.2 million investment was made in a now-bankrupt coffee franchise in San Francisco. Additional funds were invested in two New York City restaurants that are no longer operating.
In 2010, the report stated, Total Wealth Management contracted with Private Placement Capital to serve as its fund manager. Janulewicz spoke with Tony Hartman, the principal and manager of Private Placement Capital. Janulewicz said in the report:
Mr. Hartman has represented that PPCN has little in the way of operating cash to undertake its activities much less make distributions to investors.
But, despite the nonperformance of the properties, Janulewicz stated, Private Placement Capital has consistently paid 12.5 percent interest on a semiannual basis through 2014, including what she characterized as “substantial cash payments.”
“The degree to which the entities appear to be intertwined is suspect,” Janulewicz wrote in her report.
Investors have been charged approximately $300,000 in legal fees to defend against lawsuits brought by other investors, she reported, as well as accounting fees and other operating expenses of Total Wealth Management.
The San Diego Reader reported in August 2014 that Cooper had been promoting his investment company on a weekly radio broadcast using his ties to the Boy Scouts, the Marine Corps and The Church of Jesus Christ of Latter-day Saints.
However, the report stated, Cooper’s company had been taking revenue-sharing fees, or kickbacks, from the firms that were being invested in. The SEC demanded return of those fees in a cease-and-desist order issued to Cooper in April 2014. Janulewicz went to Cooper’s San Diego office only to find he had vacated the office unannounced in 2014, leaving nothing behind except several months of unpaid rent, according to the receiver’s report.
It was discovered that Cooper’s records were being kept in “cloud storage,” which Janulewicz immediately locked down with a court order. The report states thousands of pages of records were discovered in this computer storage, and those records are currently being reviewed.
The report went on to say that Total Wealth Management did not invest its clients’ funds in a responsible manner. Among other things, it made a substantial investment in Life’s Good Inc., determined by the U.S. District Court to be a Ponzi-like investment scheme. Life’s Good Inc. principal Robert Stinson was sentenced in 2012 to 33 years in prison for his role in the scheme.
Janulewicz concluded that the potential loss to Total Wealth Management’s investors could approach $44 million.
Cooper could not be reached for comment, and a phone number listed in his name has been disconnected.
However, an answer to the SEC complaint was filed for Cooper by his attorney, Vincent Brown, of San Diego, California. Brown denied all allegations against Cooper and requested a jury trial.
Brown said the allegations were spurious and consisted of nothing more than investments that lost money.
“Ultimately, Mr. Cooper was an investor in those same investments and lost a ton of money himself,” Brown said. “The allegations aren’t that, like, Mr. Cooper did anything like a Ponzi scheme or anything like that, but he invested a client’s money into investments, some of which were bad, as investments often do. We think the government is overreaching in this case.”
Ed. note: Featured image first published was illustrative and did not depict the mine subject to this report. To eliminate confusion, that image has been replaced April 4, 9:15 a.m.
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